Congress reaches bipartisan payroll tax-cut deal | G7Finance.com ...

WASHINGTON (Reuters) ? U.S. congressional negotiators agreed on Wednesday to a bipartisan deal to extend a payroll tax cut, which would give a victory to Democrats and allow Republicans to get out from under an issue that threatened to hurt them in the November elections.

U.S. Senator Max Baucus, a Democrat, told Reuters enough negotiators from both parties had signed off on the accord to clear it for a vote by the full Senate and House of Representatives.

The two chambers are expected to vote on the deal before lawmakers depart Friday for a week-long recess.

Just hours earlier, talks hit a snag when a number of Republicans and a least a few Democrats declined to sign off on the deal, reached earlier in the day by lead negotiators.

But those concerns were apparently resolved.

The tax cut had divided Republicans and risked further angering voters, who already hold Congress in low regard, if they were seen as blocking renewal of the tax relief.

?We?re determined to put this to an end,? said Republican Representative Renee Ellmers. She said Republicans want to ?move on to the real issues: the president?s failed policies? to support the ailing economy.

House Speaker John Boehner and fellow Republican leaders cleared the way for a deal on Monday when they dropped their demand that there be spending cuts to pay for a reduction in the payroll tax in order to avoid an increase in the federal debt.

The decision showed Boehner?s pragmatic side since his party would have been blamed for any failure to extend the tax cut, which many of his members initially opposed.

DODGING THE BLAME

Since becoming speaker in January 2011, Boehner has had problems keeping some conservative members in line, particularly those who see deficit reduction as their chief mission.

The agreement would extend the payroll tax cut, first implemented in 2011 at the request of Obama, until the end of this year for about 160 million U.S. workers.

Passage would end a battle that has raged since last year over legislation some economists say is vital to keeping the U.S. recovery on track by injecting more consumer spending into the economy.

The payroll tax cut is estimated to put $1,000 in additional money in the hands of the average working family over one year. And extending unemployment benefits is seen by economists as one of the most effective ways of encouraging consumer spending because the unemployed use their benefit checks for basic needs.

Long known as the party of low taxes, Republicans initially fought the payroll tax cut that largely helped low- and middle-income workers, saying temporary tax cuts did little to stimulate the economy.

With economists disagreeing and Democrats simultaneously forcing Republicans to go on the record in favor of tax cuts for the wealthy, Republicans found themselves in a losing position.

As their leaders tried to move into winning territory, it only stoked Republican infighting as conservatives, including Tea Party activists, resisted handing Democrats a victory.

Analysts said opinion polls showing public disgust with a gridlocked Congress may have helped drive lawmakers, many of whom are up for re-election this year, toward a deal.

(Additional reporting by Donna Smith and David Lawder; editing by Cynthia Osterman and Todd Eastham)

Source: http://g7finance.com/personal-finance/congress-reaches-bipartisan-payroll-tax-cut-deal/

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